TURKISH AIRLINES. 1Q 18 Results Summary

Transcription

1 TURKISH AIRLINES 1Q 18 Results Summary

2 Key Financial Data Change (USD mn) 1Q'17 1Q'18 Change ,9% Revenue ,5% ,5% Passenger Revenue ,6% ,2% Cargo Revenue ,2% Net Operating Profit / Loss Profit From Main Operations Net Income ,8% 2,0% 2,8 pt Net Income Margin -18,8% -3,1% 15,7 pt ,3% EBITDAR ,4% 16,6% 27,5% 10,9 pt EBITDAR Margin 13,3% 19,1% 5,8 pt 2

3 Gelir Gelişimi (2Q 16 ve 2Q 17) Revenue Development (1Q 17 vs 1Q 18) (mn USD) Load Factor Cargo and Other Revenue (Ex-Currency) +141 Pax RASK (Ex-Currency, Ex-L/F) +124 Currency +88 Volume ,675 Passenger (38%) 2,304 Cargo (52%) Other (42%) ,980 Total Revenue (40%) 2,763 1Q 17 1Q 18 3

4 Unit Revenue Development RASK (USc) 5,04 6,00 5,75 1Q'17 1Q'18 1Q'18 ex-currency R/Y (Usc) 6,28 6,95 6,65 1Q'17 1Q'18 1Q'18 ex-currency 4

5 Regional Yield Development in USD (1Q 18 vs 1Q 17) America Europe Asia / Far East ASK RASK R/Y 23,4% 10,3% 9,6% R/Y excurrency 9,2% ASK RASK R/Y 24,2% 17,2% 14,9% R/Y excurrency 6,5% ASK RASK R/Y 19,5% 13,9% 12,5% R/Y excurrency 7,2% Africa Domestic Middle East ASK RASK R/Y 18,4% 9,8% 8,7% R/Y excurrency 3,2% ASK RASK R/Y 23,6% 5,0% R/Y excurrency 0,6% R/Y excurrency ASK RASK R/Y 19,4% 11,4% 8,4% 5,5% -1,0% R/Y : Yield : Passenger Revenue / RPK (Scheduled) RASK : Passenger and Cargo Revenue / ASK* (Scheduled) * ASK value is adjusted for cargo operations. 5

6 Gelir Gelişimi (2Q 16 ve 2Q 17) Profit From Main Operations Bridge (1Q 17 vs 1Q 18) (mn USD) Revenue Effect: +88 mn USD Cost Effect: -23 mn USD +163 RASK (Ex-Currency, Ex-L/F) Ex-Fuel Unit Cost (Ex-Currency, Ex-Utilization, Ex-L/F) -85 Fuel +1 Other* +63 Utilization +65 Currency Load Factor 1Q 17 Profit From Main Operations 1Q 18 *Includes other operating income, other operating expense and FX gains/losses from operational activities. 6

7 Operational Expense Breakdown Change (mn USD) 1Q'17 1Q'18 Change ,2% Fuel ,0% ,6% Personnel ,8% ,1% Aircraft Ownership ,9% ,7% Airports & Air Navigation ,2% ,9% Sales & Marketing ,3% ,7% Ground Handling ,6% ,4% Passenger Services & Catering ,2% ,3% Maintenance ,8% ,3% Other ,3% ,2% TOTAL ,1% ASK Growth: 1,6% ASK Growth: %14,6 Notes: (1) Includes General Administration and Other Cost of Sales. 7

8 CASK Breakdown Change (USc) 1Q'17 1Q'18 Change 1,57 1,66 5,6% Fuel 1,62 1,93 18,8% 1,09 1,02-7,0% Personnel 1,06 1,08 2,0% 0,96 0,92-4,6% Aircraft Ownership 1,01 1,00-0,6% 0,56 0,57 1,2% Airports & Air Navigation 0,54 0,59 11,0% 0,52 0,49-6,3% Sales & Marketing 0,53 0,64 19,9% 0,38 0,38 0,1% Ground Handling 0,37 0,42 13,2% 0,34 0,29-13,7% Passenger Services & Catering 0,31 0,35 11,0% 0,35 0,37 7,6% Maintenance 0,37 0,41 11,6% 0,18 0,18 0,7% Other 0,20 0,20-1,9% 5,95 5,87-1,3% TOTAL 6,01 6,62 10,1% 8

9 Selected KPI s Change 1Q'17 1Q'18 Change ,8% Fuel Price (Usd/ton) ,8% 3,29 3,28-0,4% Fuel Consumption (lt) per 100 ASK2 3,29 3,41 3,9% ,2% Aircraft Ownership Cost per BH ,6% ,2% Maintenance Cost per BH ,6% ,6% Handling Cost per Landing ,7% ,5% 9,27 7,43-19,8% Airports & Air Navigation Cost per km Flown Passenger Services & Catering Cost per Pax ,5% 8,74 8,66-1,0% 9,0% 7,7% -1,4 pt Sales & Marketing Cost / Total Revenue 9,7% 9,6% -0,2 pt 9

10 EBITDAR Calculation Change EBITDAR (mn USD) 1Q'17 1Q'18 Change % Sales Revenue ,5% % Cost of Sales (-) ,0% % GROSS PROFIT / (LOSS) ,6% % General Administrative Expenses (-) ,9% % Marketing and Sales Expenses (-) ,1% NET OPERATING PROFIT / (LOSS) % Other Operating Income ,1% % Other Operating Expense (-) ,0% Profit / (Loss) from Main Operations % Adjustments ,8% % Share of Investments' Profit / Loss Accounted by Using The Equity Method % Income From Government Incentives ,1% EBIT % Depreciation ,7% % EBITDA ,7% % Adjusted Operating Lease Expenses ,6% % Adjusted Short term Lease Expenses (Wet-lease) ,5% % EBITDAR ,4% 16,6% 27,5% 10,9 pt EBITDAR MARGIN 13,3% 19,1% 5,80 1 Adjusted for A/C heavy maintenance 2 Adjusted for A/C Rent and heavy maintenance portion (Aprox. Notes: 55%) - For 1Q 18 Turkish Technic s contribution to EBITDAR through consolidation is 48 mn USD, compared to 35 mn in 1Q For 1Q 18 adjustments for heavy maintenance of operational lease expenses were 78 mn USD compared to 70 mn USD in 1Q

11 TURKISH AIRLINES 1Q 18 Results 11

12 Aviation Sector & Economy Turkish Market Growth (mn passengers) Domestic (*) International 11-19F CAGR 8.4% 5.4% 80,3 84,0 83,0 65,6 73,3 71,2 48,5 51,2 54,0 42,7 38,1 32,4 89,3 58,0 100,1 61,7 Annual GDP Growth Forecast ( ) Asia-Pacific 3,9% M.East 3,5% Africa 3,5% Latin America 3,0% World 2,8% T 2018T 2019T Source: General Directorate of State Airports Authority (DHMI) (*): Adjusted for double count on Domestic Pax North America CIS Europe 1,7% 2,1% 2,0% Annual RPK Growth (%) Annual RPK Growth Forecast ( ) 22,9% 26,7% 23,2% Latin America Africa 6,1% 5,9% 16,2% Asia-Pacific 5,7% 11,6% M.East 5,6% 6,3% 5,3% 5,2% 5,7% 7,3% 7,4% 6,3% 7,9% 7,5% World CIS 4,7% 4,3% World RPK Growth THY RPK Growth Europe North America 3,7% 3,0% Source: IATA 12 Source: Boeing Current Market Outlook

13 Weekly Flights Turkish Airlines Historical Growth x growth in fleet, 5x growth in pax, 3x growth in # destinations since mn pax mn pax Aircraft 69 mn pax mn pax m pax 14m pax mn pax 23m pax mn pax 20m pax mn pax mn pax mn pax Destinations * As of Note: Diameters of the bubbles are proportional to the number of passengers carried. 13

14 We Fly To 121 Countries Germany Russia Belgium Moldova Egypt Gabon Saudi Arabia UAE China Bangladesh Munich Moscow Brussels Chisinau Cairo Libreville Jeddah Dubai Beijing Dhaka Frankfurt Sochi Bulgaria Poland Alexandria Mali Madinah Abu Dhabi Guangzhou Indonesia Berlin St. Petersburg Sofia Warsaw Hurghada Bamako Riyadh Lebanon Shanghai Jakarta Stuttgart Kazan Varna Belarus Sharmel-Sheikh Burkina Faso Dammam Beirut Taipei Maldives Düsseldorf Rostov Romania Minsk Algeria Ougadougou Yanbu Jordan Hong Kong Male Cologne Ekaterinburg Bucharest Slovakia Algiers Cote D'Ivore El Qassim Amman Pakistan Singapore Hamburg Ufa Cluj Kosice Oran Abidjan Taif Akabe Karachi Singapore Hanover Astrakhan Constanta Constantine Chad Iran Qatar Islamabad Sri Lanka Nuremberg Novosibirsk Hungary Tlemcen N'Djamena Tehran Doha Lahore Colombo Bremen Stravropol Budapest Batna Benin Mashad Bahrain Kyrgyzstan Uzbekistan Friedrichshafen Voronezh Czech Rep. South Africa Cotonou Shiraz Bahrain Bishkek Tashkent Leipzig Münster Samara Krasnador Prague Croatia Johannesburg Cape Town Guinea Conakry Tabriz Isfahan Oman Muscat Osh Kazakhstan Samarkand Philippines Baden-Baden Italy Milan Rome Venice Bologna Naples Catania Switzerland Zurich Geneva Basel Ukraine Kiev Odessa Ivano-Frankivsk Zagreb Dubrovnik Portugal Lisbon Porto Bosnia Sarajevo Finland Durban Nigeria Lagos Abuja Kano Cameroon Douala Yaounde Mozambique Maputo Niger Niamey Eritrea Asmara Madagascar Antananarivo Kermanshah Ahvaz Israel Tel Aviv Iraq Erbil Baghdad Basra Syria Aleppo Damascus Yemen Aden Sanaa Almaty Astana Japan Tokyo Osaka India Mumbai New Delhi Manila Tajikistan Dushanbe Khujand Nepal Kathmandu Mongolia Ulaanbaatar Turin Dnepropetrovsk Helsinki Kenya Mauritius Sulaymaniyah Thailand Pisa Kharkiv Norway Mombasa Port Louis Najaf Phuket Future Routes Bari Kherson Oslo Nairobi Seychelles Mosul Bangkok Future Routes Genoa Zaporijya Albania Tanzania Seychelles Kuwait Saudi Arabia Turkmenistan France Lviv Tirana Azerbaijan Dar Es Selaam Libya Kuwait Abha Ashgabat Paris Simferopol Ireland Lankeran Kilimenjaro Misurata Malaysia Lyon Donetsk Dublin Poland Zanzibar Benghazi Kuala Lumpur Nice Austria Kosovo Krakow Tunisia Sebha South Korea AMERICAS Marseille Vienna Pristina France Tunis Tripoli Seoul Toulouse Salzburg Macedonia Nantes Djibouti Sierra Leone Afghanistan 8 COUNTRIES, 17 CITIES Bordeaux Graz Skopje Spain Djibouti Freetown Kabul Future Routes UK London Manchester Birmingham Northern Cyprus Lefkosa Azerbaijan Baku Serbia Belgrade Malta Malta La Coruna Russia Makhachkala Italia Ethiopia Addis Ababa Ghana Accra USA New York Los Angeles Washington Panama Panama Cuba Havana Mazar-ı Sharif Vietnam Ho Chi Minh Hanoi Indonesia Denpasar Spain Ganja Slovenia Palermo Morocco Boston Venezuela Barcelona Nakhichevan Ljublijana Casablanca Chicago Caracas Future Routes Madrid Netherlands Montenegro Rwanda Houston DOMESTIC Malaga Amsterdam Podgorica Kigali Angola Miami Valencia Rotterdam Scotland Somalia Luanda Atlanta 49 CITIES Bilbao Greece Edinburgh Mogadishu Egypt San Francisco Athens Estonia Sudan Aswan Canada Thessaloniki Tallinn Khartoum Luxor Toronto Future Routes Sweden Latvia Uganda South Sudan Montreal Mexico Stockholm Riga Entebbe Juba Argentina Mexico City Gothenburg Lithuania Mauritania Comoros Buenos Aires Denmark Vilnius Nouakchott Moroni Brazil Copenhagen Luxemburg Senegal Sao Paulo Aalborg Luxembourg Dakar Columbia Billund Congo Bogota Georgia Kinshasa Tbilisi Batumi * As of EUROPE AFRICA MIDDLE EAST 14 FAR EAST 43 COUNTRIES, 114 CITIES 34 COUNTRIES, 52 CITIES 13 COUNTRIES, 34 CITIES 22 COUNTRIES, 37 CITIES

15 Istanbul s Geographical Advantage - A Natural Hub Wide Body Range Narrow Body Range Capability to and from Istanbul (with full passenger payload) 201 out of 251 international destinations More than 40% of world-wide international traffic SFO LAX IAH MEX ORD ATL JFK YYZ HAV YUL MIA IAD BOS PTY BOG CCS ISTANBUL NRT KIX ICN PEK PVG CAN HKT BKK TPE MNL HKG SGN KUL SIN CGK Over 60 national capitals All of Europe, Middle East, Central Asia and North and East Africa GRU EZE TNR MPM MRU JNB DUR CPT Narrow Body Range Current Wide Body destinations Future Wide Body destinations 15

16 Highest Connectivity for Europe, Africa and Middle East Airlines Connectivity by Number of O&D Pairs (Top Three) Detour* Advantage Europe to the World Turkish Airlines 22,356 British Airways 9,588 Lufthansa 8,004 Middle East to the World Turkish Airlines 9,044 British Airways 2,208 Qatar Airways 1,980 From Europe Via Istanbul To Far East 10% Africa to the World Turkish Airlines 12,699 Air France 4,585 British Airways 3,043 Far East to the World Turkish Airlines 9,504 United Airlines 8,700 Air China 5,115 17% To Africa 6% To Middle East * Detour: Increase in the flight distance compared to a non-stop flight. Forecasted by using 6,000 arrival-departure cities Source: Retrieved from OAG. As of

17 Passenger Traffic Total Passengers (mn) Passenger Traffic 48,3 28,2 54,8 32,1 Domestic 61,2 62,8 34,9 35,5 International 68,6 38,5 1Q'17 vs 1Q'18 Landing up by 16,0% ASK up by 14,6% RPK up by 24,6% 16,7 13,0 20,1 22,7 26,3 27,3 30,1 9,0 7,2 5,9 7, Q'17 1Q'18 Passenger # up by 28,5% L/F up by 6,5 pt Load Factor (L/F %) Annual Changes (%) Total L/F Domestic L/F International L/F 84,9 84,1 83,3 81,9 82,1 80,6 80,5 79,7 79,0 79,1 79,3 77,6 79,8 78,9 78,9 78,4 74,5 74,0 76,8 73,4 73, ASK 48% 21% 16% 14% 11% 2% RPK 55,7% 23,2% 16,2% 11,6% 6,4% 7,9% PAX 34% 24% 14% 12% 3% 9% L/F (Point) 4,0 1,4 0,3-1,7-3,1 4, Q'17 1Q'18 17

18 Passenger Breakdown Int l to Int l Transfer Passengers ( 000) Int l Passenger Breakdown by Geography 1Q 18 Americas Africa 7% 10% 9% 7% Far East 15% 16% Europe 1Q 17 52% 53% Middle East 15% 16% Q'17 1Q'18 Passenger Breakdown by Transfer Type Note: Includes only scheduled passengers. 1Q 18 Passenger Breakdown by Cabin Class 1Q 17 Domestic 45% 43% 1Q 16 32% 33% Int l-int l Transfer Economy 96% Business 4% 11% 13% 10% 13% Int l-dom Transfer Int l Direct Note: Int l to int l transfer passengers share in total international passengers is 58%. Note: Includes only scheduled passengers. 18

19 Total Revenue and Expenses Revenues (mn USD) Expenses (mn USD) International Pax Domestic Pax Other Fuel Personnel Other Q'17 1Q' Q'17 1Q'18 Note: Int and domestic pax revenue indicates scheduled pax revenue. Other revenue includes cargo, charter and other revenue. 19

20 Revenue Breakdown (1Q 18) Revenue by Business Type Revenue by Geography Cargo 13,9% Technic 2,2% Charter 0,2% Other 0,5% Africa Americas 1Q 18 10% 10% 28% 14% 27% 13% Europe Middle East 1Q 17 12% 11% 12% 26% PAX 83,2% Domestic 11% 26% Far East Note: Includes total passenger and cargo revenue Revenue by Passenger Class Revenue by Point of Sale Business 23% Middle East 8% Africa America 4% 11% Europe 29% Economy 77% Economy 77% Domestic: International: %43 %57 Far East 12% Internet / Call Center 18% Turkey 17% Domestic: International: %43 %57 Note: Includes only scheduled passenger revenue 20

21 Unit Operating Costs Cost Per ASK (Usc) 10,0 CASK Personnel/ASK Fuel/ASK Others/ASK 8,0 7,92 7,95 7,74 6,0 6,41 5,95 5,87 6,01 6,62 4,0 3,49 3,63 3,66 3,39 3,29 3,20 3,33 3,61 2,0 3,00 2,96 2,82 1,95 1,57 1,66 1,62 1,93 0,0 1,43 1,36 1,26 1,07 1,09 1,02 1,06 1, Q'17 1Q'18 21

22 Operating Efficiency Personnel Efficiency Q'17 1Q'18 THY THY Teknik THY HABOM THY Uçuş Eğitim ve H. İşl. A.Ş. Pax Per Personnel Average Daily Flight Utilization (hrs) 14:20 12:11 11:47 15:04 14:59 15:06 12:48 12:46 12:51 12:18 12:12 12:09 13:53 13:04 11:55 11:42 12:00 12:37 10:37 11:28 11:14 11:11 10:05 11: Q'17 1Q'18 WB Long-Haul NB Medium-Haul Total 22

23 EBITDAR Margin 30% 25% 20% AVG EBITDAR Margin ( ): 21% ,5% ,5% 24,5% ,8% 18,8% % 16,6% 19,6% % 5% 13,3% % Q'17 1Q'18 0 (mn USD) Q'17 1Q'18 YoY Change Revenue ,5% EBIT EBIT Margin 8,4% 7,7% 7,3% 9,9% -1,7% 10,8% -7,9% 2,2% 10,1 pt EBITDA ,7% EBITDA Margin 15,4% 14,3% 14,0% 18,7% 10,0% 20,6% 5,1% 11,9% 6,8 pt EBITDAR ,4% EBITDAR Margin 19,5% 18,8% 18,8% 24,5% 16,6% 27,5% 13,3% 19,1% 5,8 pt Net Income Net Income Margin 8,0% 3,6% 7,6% 10,2% -0,8% 2,0% -18,8% -3,1% 15,7 pt 23

24 Fleet Type Total Owned Wide Body Narrow Body Cargo Financial Lease Opr./Wet Lease Seat Capacity Average Fleet Age Year End Fleet* A , A , A , B777-3ER , A B Total , B ER , B737-9 MAX B , B , B737-8 MAX A321 NEO A , A , A , A WL B WL , Total , A F 9 9 4, B777F 2 2 0, Wet Lease ,7 5 2 Total , GRAND TOTAL , Year End Seat Capacity : *After exit-entry Seat Capacity Change : 0% 0% 8% 11% 11% 8% 2% 24

25 Fleet Development Aircraft Purchases Delivered To Be Delivered Type TOTAL TOTAL A B Wide Body A Narrow Body Cargo B777-3ER Total B ER B737-9 MAX B B737-8 MAX A A321 NEO A Total A F B777F Total GRAND TOTAL YEAR END FLEET

26 THY Price (USD per barrel) Hedging Fuel Price Risk Effect of Hedging on the Fuel Price Fuel Hedging Policy Assuming no hedging THY Price (inc. all positions) Hedging result Market Price (USD per barrel) Around 5 mn barrels of hedged position on ICE BRENT in 1Q 18. Current fuel hedging levels: FY18: 47% (15 mn barrel) FY19: 20% (7,5 mn barrel) 50% 48% 46% 44% 42% 40% 38% 35% 33% 31% 29% 27% 25% 23% 21% 19% 17% 15% 13% Active Surcharge Policy: 50% of fuel cost is reflected to ticket prices Decreasing layered hedging strategy (24 months) Crude oil based swaps and options Aim to reach 50% of following months budgeted consumption 10% 8% 6% 4% 2% 26

27 Hedging Currency Risk (1Q 18) Revenue by Currency (1) Hedging Currency Risk TRY JPY 0.9% Other 0.5% Hedging Policy EUR Cor. 5,0% 14,1% 37,3% USD Monthly gradually decreasing layered hedging strategy Each contract for 24-month period Target hedge levels: 30% for TRY, 25-35% for USD Flexible hedge strategy with respect to conditions 22,0% EUR 20,2% Current currency hedging matrix: USD Cor Hedging Levels* Average Price Expenses by Currency EUR GBP 0.5% 12,3% 5,3% Other EUR/USD 20% EUR/TRY 25% * Percentage of respective short positions. As of 31 March TRY 27,5% 54,4% USD (1) Currencies that have 85% correlation with USD and EUR considered as USD and EUR correlated respectively. 27

28 Aircraft Financing and Debt Management As of Total Financial Lease Liabilities: 8,3 bn USD Operational Leases: 1,8 bn USD Weighted Average Interest Rate: 2.94% 5 Year Maturity Profile (USD mn) Fixed 76% Floating 24% Currency Breakdown of Financial Lease Liabilities CHF 3% (mn USD) Total Debt Maturity Yearly Debt Service JPY 33% USD 21% EUR 43% USD Years 288 EUR Years 454 JPY Years 271 CHF Years 31 Total

29 Recent Awards 2017 Turkish Cargo Awards: Air Cargo Carrier of the Year (Gana Shippers Awards) Fastest Growing Cargo Carrier Awards (South Korea) 2017 Skytrax Awards: Best Airline in Southern Europe World s Best Business Class Lounge Best Business Class Lounge Dining Best Business Class On-Board Catering 2017 Global Transport Finance Awards: Unique deal of the year 29

30 Balance Sheet Assets (mn USD) Cash and Equivalents Trade Receivables Pre-delivery Payment (PDP) Receivables Other Current Assets Total Current Assets Net Fixed Assets of which Aircraft and Engines Pre-delivery Payment (PDP) Receivables Other Non-Current Assets Total Non-Current Assets Total Assets Liabilities (mn USD) Lease Obligations Passenger Flight Liabilities Accounts Payable Other Liabilities Total Liabilities Total Shareholders Equity of which Issued Capital of which Retained Earnings of which Differences from Currency Translation of which Net Profit for the Period Total Liabilities & Shareholders Equity

31 Income Statement (mn USD) Q'17 1Q'18 Operating Revenue % YoY Change Operating Expenses (-) ,1% of which Fuel % of which Personnel % of which Depreciation % of which Rent % Net Operating Profit / Loss Income From Other Operations % Expense From Other Operations (-) % Profit / Loss From Main Operations Income From Investment Activities (Net) % Share of Investments' Profit / Loss Financial Income % Financial Expense (-) % Profit Before Tax Tax (-) Net Profit

32 Operational Expense Breakdown (mn USD) 1Q'17 % in Total 1Q'18 % in Total Change 18/17 Fuel ,0% ,1% 36,0% Personnel ,7% ,4% 16,8% Landing, Navigation & Air Traffic 195 8,9% 248 9,0% 27,2% Landing and navigation 92 4,2% 118 4,3% 28,3% Air Traffic Control 103 4,7% 130 4,7% 26,2% Sales & Marketing 193 8,8% 265 9,6% 37,3% Commissions and Incentives 71 3,2% 104 3,8% 46,5% Reservation System 54 2,5% 68 2,5% 25,9% Advertising 32 1,5% 52 1,9% 62,5% Other 36 1,6% 41 1,5% 13,9% Depreciation ,7% 269 9,7% 4,7% Ground Handling 135 6,2% 175 6,3% 29,6% Aircraft Rent 111 5,1% 150 5,4% 35,1% Operational Lease 70 3,2% 85 3,1% 21,4% Wet Lease 41 1,9% 65 2,4% 58,5% Passenger Services & Catering 114 5,2% 145 5,3% 27,2% Maintenance 133 6,1% 170 6,2% 27,8% General Administration 28 1,3% 30 1,1% 7,1% Other 45 2,1% 52 1,9% 15,6% TOTAL % % 26,1% Operating Cost per ASK (USc) 6,01-6,62-10,1% Ex-fuel Operating Cost per ASK (Usc) 4,39-4,69-6,8% Fixed Costs ,0% ,1% 15,3% 32

33 Cargo Operations Cargo Tonnage Carried ( 000 Ton) 1Q' Turkish Cargo serves 73 destinations with 18 freighters 1Q' besides 300 destinations with 319 passenger aircraft as of March, Turkish Cargo global market share in revenue has increased from 0.6% in 2009 to 2.4% in In 2017, while World FTK grew by 9%, Turkish Cargo FTK grew by 26% compared to previous year Cargo Revenue Evolution (mn USD) Recent Awards Air Cargo Carrier of the Year (Gana Shippers Awards) Fastest Growing Cargo Carrier Awards (South Korea) Fastest Growing International Cargo Airline of the Year- Air Cargo Africa (2017) Logistics Project of the Year with our COMIS project Annual Success in Logistics Awards (2016) Best International Air Cargo Company Atlas Logistics Award (2016) Cargo Airline of the Year Award ATN (2016) Q'17 1Q'18 33

34 THY 2018 Guidance Passenger Domestic (mn.) 33 International (mn.) 41 Total (mn.) 74 Financial Revenue* (USD bn.) 11,8 EBITDAR %23 - %24 Operational L/F %79 - %80 ASK increase 5% - %6 Cargo/Mail carried (mn./ton) 1.3 CASK (ex-fuel) increase %3 - %5 Aver. Fuel Cost (USD/ton) 633 *Unconsolidated Revenue is disclosed for 2018 Guidance. 34

35 Subsidiaries & Affiliates Turkish Airlines Group Revenue (mn USD) Net Profit (mn USD) Number of Personnel 1 Turkish Airlines Partnership Structure %49 Turkey Wealth Fund - %51 Open to Public 2 Turkish Opet Aviation Fuels %50 THY - %50 Opet 4 Sun Express (Turkey & Germany Consolidated) %50 THY - %50 Lufthansa 3 Turkish Technic % 100 THY 5 Turkish Do&Co %50 THY - %50 Do&Co 6 Pratt Whitney THY Turkish Engine Center (TEC) %51 PW - %49 THY Teknik 7 Turkish Ground Services (TGS) %50 THY - %50 Havaş 8 Turkish Cabin Interior Systems (TCI) %50 THY & THY Teknik - %50 TAI 9 Goodrich Turkish Technic Service Center 5-42 %60 TSA Rina - %40 THY Teknik 10 TSI Aviation Seats %50 THY & THY Teknik - %50 Assan Hanil 11 THY Uçuş Eğitim ve Havalimanı İşletme A.Ş %100 THY 12 Tax Free Zone (Tax Refund) %30 THY - %45 Maslak Oto - %25 VK Holding 13 THY Havaalanı Gayrimenkul Yatırım ve İşletme A.Ş % 100 THY * THY A.O. Personnel 35

36 Subsidiaries & Affiliates * Business Model Charter + Scheduled Destinations 157 Fleet 68 Seat Capacity % - 50% subsidiary company of Lufthansa and Turkish Airlines. Market leader in charter flights between Germany and Turkey. # of Passengers Load Factor (1Q18) 83,8% Revenues (1Q18) 232 mn USD Net Income (1Q18) -25 mn USD 50 confirmed Boeing next generation narrow body aircraft order to be delivered between 2015 and of those aircraft were delivered until now. * Based on consolidated amounts of SunExpress Turkey and Germany 36

37 Subsidiaries & Affiliates Turkish Technic Turkish Technic Inc. is fully owned by Turkish Airlines. Provides maintenance, repair, overhaul (MRO) services and pooling, engineering and Part 21 services to customers worldwide, including all domestic airlines and international airlines such as Air Arabia, Citilink, SpiceJet, Ariana Afghan Airlines. Facilities are located at Istanbul Ataturk International Airport (4 hangar), a new world-class facility at Istanbul Sabiha Gökçen International Airport (2 hangar), Ankara Esenboga Airport (1 hangar) and Aydın Çıldır Airport. The official opening of the new world-class facility was on June 2014 with an investment of USD 550 million, doubling maintenance, repair and overhaul capacity. Turkish Technic s unique location makes it a convenient MRO provider for around 40% of the world s civilian aircraft within a 3.5 hour flying radius reach of 55 countries. On January 2015, facility has been awarded LEED (Leadership in Energy and Environmental Design) Gold Certificate by U.S. Green Building Council for its sustainable building design. Turkish Technic has a tremendous MRO capacity to provide maintenance, repair and overhaul services to 30 narrow body aircraft and 10 wide body aircraft with over 7,000 skilled personnel. Turkish Cabin Interior Systems TCI is a joint venture of Turkish Airlines and TAI (Turkish Aerospace Industries). Located in Turkish Technic s Sabiha Gökçen Airport Facility and produces Aircraft Galleys. The company is a certified supplier of Boeing and is in the Global Offerable List for B-737 Galleys. 37

38 Subsidiaries & Affiliates Turkish Seat Industries (TSI) Formed in 2011, stakes of 50%, 45%, and 5% are respectively held by Assan Hanil Group, Turkish Airlines and Turkish Technic. The company was set up to design and manufacture airline seats and to make, modify, market and sell spare parts to Turkish Airlines and other international airline companies. Whole production takes place in Turkey and 2016 deliveries for third parties completed assuring superior customer satisfaction. The first aircraft equipped with the new seats is a Turkish Airlines B The seats were initially used on the B s of Turkish Airlines fleet and then were installed on the Airbus single-aisle fleet of A319s, A320s and A321s. The company, which commenced its operations in 2014, has an annual seat production capacity of 10 thousand. By 2024, it is planned to increase seat production capacity to 50 thousand. Goodrich Turkish Technic Service Center Provides repair, overhaul and modification services for Nacelle, Thrust Reverser and its components for Turkish Airlines and other customers from Turkish domestic and International markets. The company is located in Turkish Technic s HABOM facility. Pratt Whitney THY Turkish Engine Center (TEC) Provides engine maintenance, repair and overhaul (MRO) services to customers located in Turkey, surrounding regions and worldwide. The environmentally efficient engine overhaul facility has total usage area of 100,000 m 2 located at the Sabiha Gokcen International Airport. 38

39 Subsidiaries & Affiliates Turkish OPET In terms of investment on jet fuel supply Turkish Airlines established a jet fuel supply company together with local oil retailer OPET on September Today, the Company has the largest integrated jet fuel facility in Turkey and has fuel servicing capability at all domestic airports across Turkey. In 2016, the Company maintained its market leader position with jet fuel sales of over 3.7million cubic meters. Turkish Do&Co Established in 2007, Turkish Do&Co operates in nine gourmet kitchens all over Turkey: Istanbul (Atatürk and Sabiha Gökcen), Ankara, Antalya, Izmir, Bodrum, Trabzon, Dalaman and Adana. Over 60 national and international airlines are catered from these locations. Turkish Do&Co has significantly improved the quality of catering service offered by Turkish Airlines on board, bringing many international awards to our Company. Turkish Ground Services Owned 50% - 50% by THY and Havaş Havaalanları Yer Hizmetleri A.Ş. Provides ground services to Turkish Airlines and other customers since the beginning of 2010 and currently operates at eight major airports in Turkey: Istanbul (Ataturk and Sabiha Gokcen), Izmir, Ankara, Antalya, Adana, Bodrum, Dalaman. 39

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41 Disclaimer Türk Hava Yolları A.O. (the Incorporation or Turkish Airlines ) has prepared this presentation for the sole purpose of providing information about its business, operations, operational and financial results. The information in this presentation is subject to updating, revision and amendment. This presentation is not, and does not support to be comprehensive and to contain all information related to Turkish Airlines. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Turkish Airlines nor any of its subsidiaries or their respective affiliates nor should it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision in relation thereto. This presentation is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution would be contrary to law or regulation. The information contained in this presentation has not been subject to any independent audit or review and may contain forward-looking statements, estimates and projections. Statements herein, other than statements of historical fact, regarding future events or prospects, are forward-looking statements. Although Turkish Airlines believes that the estimates and projections reflected in the forward-looking statements are reasonable, they may prove materially incorrect, and actual results may materially differ. As a result, you should not rely on these forward-looking statements. Turkish Airlines undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. Any forward-looking statement in this presentation speaks only as of the date on which it is made, and Turkish Airlines undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except to the extent required by law. Industry, market and competitive data and certain industry forecasts used in this presentation were obtained from internal research, market research, publicly available information and industry publications and other market commentaries. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable at the relevant time, but that the accuracy and completeness of such information is not guaranteed. Similarly, internal research, market research, industry publications and other publicly available information, while believed to be reliable, have not been independently verified, and Turkish Airlines does not make any representation as to the completeness or accuracy of such information. No representation, warranty or undertaking, expressed or implied, is or will be made by Turkish Airlines or its shareholders, affiliates, advisors or representatives or any other person as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained in this presentation (or whether any information has been omitted from this presentation). Turkish Airlines, to the extent permitted by law, and each of its respective directors, officers, employees, affiliates, advisors or representatives disclaims all liability whatsoever (in negligence or otherwise) for any loss however arising, directly or indirectly, from any use of this presentation or its contents or otherwise arising in connection with this presentation. This presentation should not be construed as financial, legal, tax, accounting, investment or other advice or a recommendation with respect to any investment. Under no circumstances is this information and material to be construed as a prospectus, supplement, offering memorandum or advertisement, and neither any part of this presentation nor any information or statement contained herein shall form the basis of or be relied upon in connection with any contract, commitment or investment decision. By reading this presentation or attending or listening to any relevant meeting, conference call or webcast organized by the Company, you agree to be bound by the above provisions. 41